One of the first steps I took when I decided to get rid of the debt was to listen to a number of ‘gurus’. Every one of them said to get a budget. MOST of them said to make a fairly detailed budget, or to use the popular Envelope System.

The Envelope System, endorsed principally by Dave Ramsey, makes the user budget on a cash-only system. Envelopes are used to divide up the weekly budget into categories and an amount of money that is stored in each envelope. Once the money is gone, it’s gone. Simple straightforward and fairly easy.

I’ve never been a big fan of dealing with cash money, so this system didn’t really appeal to me. I’ve heard lots of good things about it from others though.

As I’ve said before, I’m the geek of the family, so I have programs (Quicken) and spreadsheets that keep track of the numbers, and I’ve set up everything through my Bank of America on-line account to be paid automatically. That way I’ll never miss a payment, and I don’t have to think about how much gets paid by what.

I’m a big fan of the Automatic Millionaire style of money management because I’ve screwed up payments in the past, particularly when I had more than one credit card from the same company. Bad Idea!!

My budget works like this.

1. Set up ALL bills to be paid (minimums) automatically from Bank of America on-line.
2. Figure out (from Quicken) what the household budget is, for food, gas, incidentals, etc. and set up that amount to be automatically deposited in my wife’s account from my paycheck. That way I never see it.
3. Send a percentage to our EmigrantDirect account for our emergency fund (ABSOLUTELY a must)
4. Anything left over goes into the debt snowball paid towards the bill with the highest interest rate.

This has worked great so far, but only because most of it is automated. Before I got it set up automatically, the manual process would take a ton of time each month. Checking the bills, verifying that they were paid, and paid the correct amounts, and tracking the remaining balances. A true pain.

So dear readers, how do YOU budget your money?